Overcoming the barriers to 20x B2B SaaS growth

The value of the biggest B2B SaaS companies has been growing. But not at the epic rates experienced by B2C software. At the same time, the number of B2B SaaS startups also keeps rising. Is there enough potential revenue in the market to justify the level of SaaS investment? 


Jason Lemkin wrote a fascinating piece on SaaStr a couple of weeks ago about the SaaS Decacorns we need by 2021. His conclusions were optimistic. He believes both that the market as a whole is big enough. And that there are companies there with the potential to become the mega leaders of the future. 


I am not going to comment on the latter. But I share his optimism about the overall market. We are only scratching the surface of the opportunity for B2B SaaS. Reaching this potential demands great products which solve real business problems. SaaS companies must also help customers execute change to realise the benefits. All in the face of strong resistance from multiple vested interests. 


It will not be enough just to wait for the market to come to you. B2B SaaS companies need to take the lead in finding strategies to overcome these challenges. 

The scale of the opportunity

​The simple fact is that traditional on premise, licence based revenues still account for the bulk of the enterprise software market. You can fill your boots with various projections and analyses of this topic. For starters check out this Forbes collection. 


However you look at the numbers this makes no sense. SaaS is an ideal platform for innovation and increases the speed of change. It offers much greater flexibility and agility. Integration allows for rapid adoption of best in class. And its cheaper. 


The question is not whether the market opportunity exists. What bugs me is why progress is so slow. 

Executing change

The one word answer is change. 


SaaS does not bring any of the benefits listed above to business. It provides a tool or a platform to improve a business. To realise the gains, the business must change. Businesses of any size find it hard to execute change. An established business is different from a startup in two major ways:



• A startup has a bias to action. Established business has a bias towards the status quo. This sounds awful. Yet if it works, why fix it? Remember that the current way of doing business got your customer to where they are. No matter what disruption you offer, you should respect their past success.
  
• A startup pulls in one direction. Larger businesses have lots of different groups and interests. Disparate measures of success. Greater or lesser magnitude of change in each area. The threat of losing the knowledge or the budgets that convey internal power. In every enterprise sale, your customer will have losers to overcome as well as winners to wow.

Organised resistance

​Your customers internal opponents are not the only losers. Growing SaaS by a factor more than 20x will do damage to the traditional software business. 


The big enterprise vendors are the tip of a large iceberg. They are the visible part of an ecosystem that includes consultants, systems integrators, lawyers, training providers, independent software vendors, project managers, change leaders, corporate IT careerists and a raft of other specialists who have carved out a niche that is built on SAP, Oracle and the rest.


The strident voices of direct competitors are easy to deal with. Corridor whispers by trusted advisors and “independent” experts are much more insidious. So be careful. Resistance is everywhere. 

The Chairman's View

​I share Jason’s optimism about the scale of the SaaS opportunity. That’s one of the reasons I love working with B2B SaaS companies. The winners will have great products and fantastic teams led by brilliant leaders. They will also have an effective strategy to overcome the barriers to change.


Each market opportunity and in some cases each deal will need different specifics. The outlines of any successful approach will include:



• A long term commitment to customer success. Help the customer make the change and realise the benefits of your product. This is every bit as important as any product feature.
• This means that a customer signature is the start of the battle not the final victory. Your metrics and incentives should not be constructed around a sales funnel that ends with closing the deal.
• Gathering customer feedback should also be a long term process. With modern technology, why rely on single point in time case studies. Use the dialogue in your customer channels to build a picture of success real time.
• Keep working on reducing friction for your users. An enterprise customer will have a large and diverse population of users. So offer onboarding and help to support these different audiences.
• Consider partner strategies that offer value to others in the ecosystem.  Make your SaaS valuable to consultants and training providers. This will improve your distribution and pick off at least some of your opposition.



And do it all with confidence. The market is moving toward B2B SaaS. Let's help it along.